Exam Review

Hey there, streaming enthusiasts! Imagine you're the mastermind behind GlobalStream, a super cool streaming median company. You're offering streaming at $14.99 a month (costing you $9.50) all over the globe. But here's the twist: people in developed markets are willing to pay $19.99, while those in emerging markets think $7.99 is just right. And guess what? A whopping 70% of signups are thanks to your exclusive content! So, what would be your ultimate strategy to boost value creation and capture? Join Sophia, Anika, and Priya in this decision-making adventure!

• Introduce premium-tiered pricing with enhanced features to capture higher WTP in developed markets

• Reduce subscription price to $11.99 globally to maximize subscriber growth

• Implement market-specific pricing with geographic content licensing strategies to align with regional WTP differences

• Maintain current pricing but redirect 30% of content budget toward technological innovation to enhance personalization and reduce churn

Imagine you're a savvy farmer like Samuel or Priya, and you've discovered BioAgra's magical seed treatment that boosts your crop yields by 20%! Now, here's the twist: the standard production costs $40/acre, but there's a simplified version for just $18/acre. Commercial farmers are willing to pay $85/acre, while smallholder farmers like Emma are willing to pay $25/acre. Which strategy would you choose to maximize your farming success?

• Premium Approach: $80 global price. Premium Strategy: Price at $80 per acre globally, focusing exclusively on commercial farmers in developed markets.

• Volume Approach: Price at $60 per acre globally to rapidly build market share across all farmer segments.

• Tiered Approach: Implement differentiated pricing and packaging ($78 for commercial farmers, $25 for smallholders) with product modifications for each segment.

• Licensing Approach: $30/acre to partners. Licensing Strategy: License the technology to established agricultural input companies at $30 per acre equivalent.

AutoElite, a premium electric vehicle manufacturer, known for its cutting-edge technology and luxurious design, is the talk of the town! Imagine Mia, Abigail, and Sophia are part of the strategic team. Market research shows that customers are willing to pay up to $85,000 for their flagship sedan, which currently costs $55,000 to produce. AutoElite has set the price at $75,000. The CEO, along with our trio, is evaluating three exciting strategic options:

Option 1: Mia suggests investing in battery technology to reduce production costs to $48,000 per vehicle while keeping the price steady

Option 2: Abigail proposes enhancing performance features and exclusive software to boost WTP to $92,000, with costs rising to $59,000

Option 3: Sophia thinks reducing the price to $70,000 could capture market share from luxury combustion vehicles while maintaining current costs

Which strategy would create the MOST total value according to the Brandenburger and Stuart model?

• Option 1, because the cost reduction maximizes supplier surplus while maintaining customer value

• Option 2, because the increase in WTP exceeds the increase in costs

• Option 3, because the price reduction captures new customers and increases total surplus

• Options 1 and 3 create the same total value since WTP remains unchanged in both scenarios

At a lively team meeting, Sophia, the CEO of a healthcare software company, enthusiastically declares: "Our mission is to become the most innovative provider of patient management solutions and capture 20% of the market within three years!" The team buzzes with excitement as they craft detailed timelines, assign responsibilities to each department, and schedule quarterly review meetings to track their progress. But wait, amidst all the excitement, what crucial strategic element might they be overlooking?

• Detailed financial forecasts

• Explicit decisions about target markets and competitive advantages

• Regular stakeholder feedback mechanisms

• Standardized performance metrics

David, the CEO of a trendy sustainable fashion brand, excitedly announces: "We're going global, folks! We're going to expand into international markets and boost our product line by 50% while keeping our top-notch profit margins over the next two years." The leadership team:

Stays true to their signature high-quality sustainable materials and ethical manufacturing processes for all products. Centralizes all production in their existing domestic facilities to ensure quality control. Rolls out standardized marketing campaigns across all new markets. Keeps their premium pricing strategy unchanged in all territories.

Despite their careful planning, eight months into the expansion, profit margins are taking a nosedive, even though overall sales volumes are hitting the targets. What fundamental strategic blunder is most evident in this scenario?

• Insufficient market research in international territories

• Lack of coherence between positioning and activity choices

• Inadequate resource allocation for the expansion

• Failure to implement proper performance monitoring systems

Imagine Zoe and Henry are part of a renewable energy company that's just rolled out a groundbreaking solar panel technology, doubling energy efficiency without increasing production costs. At the same time, the government has introduced a 30% tax credit for renewable energy installations, and the buzz around climate change has everyone, including Grace, leaning towards eco-friendly products. Which statement most accurately describes how these PESTEL factors affect Zoe and Henry's company's ability to capture value?

• Political factors have decreased costs, while Environmental factors have increased competitive pressure, reducing value capture

• Technological factors have increased the value created, while Political factors have reduced price sensitivity, enhancing value capture

• Social factors have reduced marketing costs, while Economic factors have increased production efficiency, maximizing value capture

• Legal factors have improved market access, while Technological factors have decreased product differentiation, limiting value capture

Imagine you're in a thrilling race to dominate the electric vehicle (EV) charging network industry! The competition is fierce, with an HHI of 2,100 and four major players, including Henry's and Olivia's companies, controlling 70% of the market. This industry is not for the faint-hearted, requiring significant upfront capital investment. But wait, there's a twist! Consumer demand is zooming ahead at 20% annually, and the technology is standardized, available to all. Which statement best captures the electrifying dynamics of value creation and capture in this industry?

• The moderate concentration enables firms to avoid destructive price competition, while high growth in consumer demand increases willingness to pay, creating favorable conditions for value capture despite capital requirements

• The high capital requirements create barriers to entry, while the standardized technology reduces differentiation potential, resulting in firms competing primarily on location rather than features or price

• The oligopolistic structure allows for implicit price coordination, while the rapidly expanding market reduces competitive pressure, enabling firms to extract value primarily from premium locations despite technological commoditization

• The concentrated market structure creates supplier power against energy providers, while high consumer demand growth enables geographic monopolies in certain regions, leading to location-based rather than service-based value capture

In the thrilling world of electric vehicles, Rohan and Aria are strategizing for a premium brand that boasts a price elasticity of demand of 0.8. Meanwhile, their rival, led by Maya, has a price elasticity of 1.5. Suddenly, the market is hit by a 15% surge in production costs due to unexpected supply chain twists and turns.

What clever strategy should Rohan and Aria adopt to navigate this electrifying scenario?

• Absorb all cost increases and maintain current prices

• Reduce production volume while maintaining quality standards

• Pass on the full cost increase to consumers through higher prices

• Increase advertising spend to highlight quality differentials with competitors

Imagine you're the CEO of a tech company, and you've just rolled out a fabulous new employee wellness program. Anika, Aiden, and Zoe are thrilled with the gym memberships, mental health resources, and flexible work arrangements. These perks are all the rage in management books, and your rivals have jumped on the bandwagon too. According to the VRIO framework, what kind of competitive edge does this give your company?

• Sustained competitive advantage

• Temporary competitive advantage

• Competitive parity

• Competitive disadvantage

Avery and Emma are evaluating their company's marketing capability score. They're having a friendly debate over which metric would be MOST appropriate to include in the "Product" component. Can you help them decide?

• Social media engagement rates

• New product success rate

• Distribution channel coverage

• Price-to-value perception